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Exam 20: Money, Financial Institutions, and the Federal Reserve

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Question 81

True/False

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Commercial banks attempt to profit by using funds deposited by customers to make interest-bearing loans to borrowers.

A) True
B) False

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Question 82

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Economic growth and the creation of jobs depend on the availability of money.

A) True
B) False

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Question 83

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After the bank failures that occurred during the Great Depression of the 1930s, the U.S. government formed three organizations: the Federal Deposit Insurance Corporation (FDIC); the Savings Association Insurance Fund (SAIF); and National Credit Union Administration (NCUA) to restore people's confidence and insure deposits.

Open-market operations involve

When the value of the dollar falls, foreign goods become less expensive for American consumers.

As nonprofit institutions, credit unions enjoy an exemption from federal income taxes.

An increase in the rate of inflation would likely result from a(n)

Enrico banks at a commercial bank that advertises its membership in the FDIC. This means that

The Federal Reserve establishes the tax policies of the U.S.

Historically, there was ________ a central bank in the U.S.

More than ever, the American economy operates as a distinctly separate entity from the international economy.

All federally chartered banks are members of the Federal Reserve.

Great news! The Fed just announced that the discount rate will rise by as much as 1% over the next three months. This will make it easier for Sean, the owner of a laser engraving business, to borrow money for that new piece of equipment he needs.

Large pension funds represent a powerful force in U.S. financial markets.

Newspapers in the nation of Hasalot report a significant increase in money supply during the past few months. This information indicates that Hasalot may experience a serious recession in the near future.

Both checks and debit cards will immediately transfers funds from the customer's account to the seller's account.

A direct payment is a preauthorized electronic payment.

The goal of Federal Reserve monetary policy is to affect the level of competition in the U.S. banking system.

Although there are many new ways to perform electronic funds transfer, legally, the only way that an employer can pay an employee is by writing a check.

An electronic funds transfer system (EFT) is an electronic transaction system used for paying bills, making direct deposits of paychecks, and paying for a purchase.